Vallejo, unions set cost-cutting deal

Proposed cost-cutting is a bid to avoid bankruptcy

Published 4:00 am, Friday, February 29, 2008

Photo: KATY RADDATZ

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A view of Vallejo, Calif. looking east on Georgia St. toward the historic district and the waterfront. After intense negotiations, the City of Vallejo will not have to declare bankruptcy on Thursday, Feb. 28, 2008.
Photo by Katy Raddatz / The Chronicle MANDATORY CREDIT FOR PHOTOG AND SAN FRANCISCO CHRONICLE/NO SALES-MAGS OUT less

A view of Vallejo, Calif. looking east on Georgia St. toward the historic district and the waterfront. After intense negotiations, the City of Vallejo will not have to declare bankruptcy on Thursday, Feb. 28, ... more

Photo: KATY RADDATZ

Vallejo, unions set cost-cutting deal

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Vallejo's leaders moved Thursday to avert the city's financial ruin, striking a cost-cutting deal with powerful public safety unions just hours before the City Council was to vote on the extraordinary action of declaring bankruptcy.

Officials did not disclose details of the proposed agreement, which was intended to help trim the city's projected $9 million deficit this fiscal year, which ends in June.

Mayor Osby Davis said the 11th-hour negotiations dealt entirely with cutting costs in labor contracts for public safety, which make up three-fourths of the city's general fund spending.

"This was about working out a solution to our financial condition to avoid bankruptcy," Davis said. "Bankruptcy (means) throwing in the towel and saying we can't do any more, and we can always do more."

Although the labor deal could keep the city of 117,000 residents solvent for the time being, Vallejo's financial troubles are far from over. The Solano County city must make dramatic cuts to services and possibly salaries and benefits to not exceed the $80 million in its general fund.

"It's heartbreaking," said Councilwoman Stephanie Gomes. "We've already been cutting for 15 years. There's hardly anything left to cut."

Thursday's agreement, which is subject to votes next week by police and fire department union members and the City Council, came after four hours of negotiations at a conference center on Mare Island, said Craig Whittom, an assistant city manager who was involved in the talks.

Council to vote on accord

The council will meet Monday to vote on the cost-saving labor agreement, and Capt. Jon Riley, vice president of Firefighters Union Local 1186, said he will take the deal to 78 members of his union for a ratification vote on Tuesday and Wednesday. Police union officials could not be reached for comment.

"Our main objective is to keep the city out of bankruptcy," Riley said. "The ramifications of that would be widespread."

Like many cities in California, Vallejo has been slammed by the skyrocketing costs of public employee packages. The plummeting housing market, meanwhile, has torn into tax revenues.

The threat of bankruptcy has harmed the city in recent days. Since the council first discussed bankruptcy at its Feb. 13 meeting, 20 police and firefighters have retired, concerned that their retirement packages would be jeopardized by the city's precarious financial state.

The packages - including payouts for unused sick and vacation time - totaled more than $3 million, union officials said. It's unclear how or when that money will be paid.

The financial meltdown has intensified debate over whether Vallejo's firefighters are overpaid and exert too much power at City Hall.

The starting salary for a Vallejo firefighter is about $70,000 a year, among the highest in the state. Ten firefighters earned more than $200,000 each last year, including overtime, city officials said.

Last fall, the union representing Vallejo's firefighters gave $31,000 to a political action committee that supported a slate of council candidates on the November ballot. In addition, individual firefighters gave several thousand dollars directly to candidates, city records show.

The police union gave $33,000 to the same political action committee, the United Workers for Local Government; the California Teachers Association gave $21,000. Other labor unions chipped in smaller amounts.

The committee spent $53,000 to promote the winning City Council campaigns of Erin Hannigan and Michael Wilson. They also received money from individual firefighters. The other five members of the council have received little to no money from firefighters in their most recent campaigns.

An expensive solution

Vallejo would have been the largest city in California to declare bankruptcy, which is expensive. Desert Hot Springs (Riverside County), a city one-fifth the size of Vallejo that declared bankruptcy in 2001 after losing a lawsuit filed by a developer, spent more than $4 million on attorneys and financial advice during the three-year ordeal.

In Vallejo, the city plans to slash funding to nearly every department and community group. Under a proposed fiscal emergency plan, 16 city staffers would be laid off and more than $800,000 would be cut from the library, museum, swimming pool, symphony and senior center as soon as the council approves the plan.

The Florence Douglas Senior Center expects to get no money from the city this year. Until 2004, the city gave the senior center $100,000 a year, about a quarter of its annual budget.

"We're not going to close, but to be very honest we're anticipating the worst," said Director Vicki Conrad. "There's a lot of anxiety and confusion. But we're trying to stay confident in our city leadership."

After a closed-door meeting on Thursday evening, the council held a brief public meeting to announce the tentative agreement and hear from some of the more than 200 people crowded into the council chambers.

Resident J.D. Miller, a financial adviser, summed up his feelings about the fiscal crisis: